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North Shenandoah Valley Industrial Report Report Q3 2022

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Market Overview

The North Shenandoah Valley industrial market continued to have positive absorption in the third quarter resulting in 1.1 million square feet of positive absorption year-to-date. This is the twelfth consecutive quarter of positive demand in the market.

The construction pipeline remained active with 6.6 million square feet underway at the end of the quarter. Rental rates continued to see growth in the region as well, ending at $6.08 overall across industrial product types.

Executive Summary

Absorption continued to be positive with over 400,000 square feet of demand during the third quarter while construction starts continued without pause. Market fundamentals along the Virginia and West Virginia submarkets in the Northern Shenandoah Valley I-81 Corridor remained strong while vacancy stayed in double digit figures in Hagerstown, Maryland.

In Warren County/Front Royal, Virginia, Equus Capital Partner’s Virginia Inland Port Logistics Center, a 340,000 square foot warehouse, was leased in its entirety by Iron Mountain within 30 days of delivery. This, coupled with no additional inventory added to this submarket or in Winchester/Frederick County, resulted in an overall decrease in vacancy. These landlord-friendly trends in Virginia are expected to continue into 2023 as the only speculative development that broke ground this quarter will not deliver until early 2024. One Logistics Park, a development of The Meridian Group and Wickshire Industrial began site work for a 1,024,000 square foot facility between the Winchester Regional Airport and Route 50-Millwood Pike, the first of two buildings in Phase A of a 250-acre site.

In West Virginia, construction continued on two 365,000 square foot buildings in the Tabler Station Logistics Park and a single 324,000 square foot building in the I-81 Mid-Atlantic Logistics Center, developed by Hines and Equus, respectively. No preleasing has occurred as of the end of the quarter. The only other building under construction in the panhandle is in Falling Waters where Red Rock is under development of 829,948 square feet that will not deliver until mid-2023.

In the Hagerstown/Washington County, Maryland section of the market, vacancy remained in double digit figures as multiple projects that delivered earlier in the year remain unoccupied. Construction activity remained strong however, with close to 4 million square feet underway. Further south along the corridor vacancy remained much lower with 1.9% in the Virginia portion and sub-1% in the eastern panhandle of West Virginia.


Absorption in the North Shenandoah Valley market continued for the twelfth consecutive quarter totaling 448,718 square feet during the third quarter. Demand for warehouse/manufacturing product was 441,718 square feet, while absorption for flex product was 7,000 square feet.

Over 6.6 million square feet of product is under construction in the market, with numerous other projects in the pipeline. Berkeley County, WV and Washington County, MD account for most of this development currently underway, making up 96 percent of ongoing construction in the market at the end of the quarter. The Virginia Inland Port Logistics Center delivered 340,000 square feet of new inventory in the Warren/Front Royal submarket.


The market’s overall vacancy decreased slightly, dropping 20-basis points to end the quarter at 5.6 percent. The warehouse product vacancy also dropped 20-basis points to end at 5.8 percent while flex vacancy ended the quarter at 2.0 percent. Warehouse product vacancy stood at 4.3 percent a year ago while flex vacancy was 5.2 percent at that same time. 

Rental Rates

Overall asking triple net rates in the North Shenandoah Valley market increased during the quarter. The current overall asking rate ended the quarter at $6.08 per square foot. Asking rental rates for warehouse product increased $0.38 to end at $6.04 per square foot, up from $5.38 per square foot a year ago. The overall flex asking rate increased to $8.03 per square foot. New construction, especially on the northern end of the market is expected to asking north of $6.50 per square foot.


North Shenandoah Valley Industrial Report Report Q3 2022

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